Vietnam has set ambitious targets for renewable energy development and is working towards a more sustainable economy. According to the National Strategy on Climate Change for 2050, which is stated in the Decision 896/QD-TTg, Vietnam aims to reach net zero greenhouse gas emissions by 2050 and increase the share of renewable energy in its power mix to 20% by 2030.
These commitments were followed by a strong promotion by the government of Foreign Direct Investments (FDI) in the green sector and foreign companies have responded positively demonstrating huge interest in the opportunities that Vietnam has to offer. In fact, some of the biggest European companies that are committed to sustainability joined the Green Economic Forum & Exhibition (GEFE) that was held in Ho Chi Minh City in November last year, among them were Ariston, Bonfiglioli, Datalogic, Piaggio, and Sanofi. This event was successfully organized by the European Chamber of Commerce in Vietnam (EuroCham), with the support of the Italian Chamber of Commerce in Vietnam (ICHAM) and other relevant European chambers and institutions.
This article aims to identify the investment opportunities for foreign companies operating in the green sector that are interested in expanding in Vietnam by looking at the major areas of investment and the relevant legal framework and incentives that companies should be aware of.
–Renewable energy
Vietnam has set the ambitious goal of producing 6% of its electricity from renewable sources by 2030. Companies are strongly encouraged to invest in project utilizing renewable energy sources including wind, solar, and hydro power. Foreign companies are also allowed to set up an investment project in this sector by establishing a wholly foreign-owned enterprise, a joint venture, or a public-private partnership (PPP) under a build-operate-transfer (BOT) contract, as stated in the Decree No. 35/2021/ND-CP that regulates the guidelines for the implementation of the Law on Investment in the Form of Public-Private Partnership.
–Clean transportation
To lower greenhouse gas emission and enhance air quality, Vietnam is supporting the use of clean transportation, such as electric cars, motorbikes, and other vehicles. To promote this industry, the Ministry of Finance (MoF) has released the Decree 10/2022/ND-CP and according to which, three years of free registration fees shall be applied to electric cars purchased or acquired from March 1st, 2022. In addition, the Ministry of Transport is planning to introduce favourable policies for electric vehicles, batteries, and components.
–Sustainable agriculture
Vietnam is developing environmentally responsible agriculture and forestry practices such as organic agriculture to lower greenhouse gas emissions and enhance the utilization of land. For this reason, the Ministry of Agriculture and Rural Development is developing a plan to reduce greenhouse gas emissions in agriculture and rural development for the 2021-2030 period, with a vision for 2050. Domestic and foreign companies operating in the agriculture sector may be eligible for incentives such as exemption or reduction of land levy, exemption or reduction of land rental and water surface rental payable to the Government and other incentives as stated in the Decree 57/2018/ND-CP.
–Waste management
The Vietnamese government is striving to better its waste management system and decrease the amount of waste produced. The Environment Protection Law 2020 that replaces the previous Environment Protection Law from 2014, provides, along with the Decree 08/2022/ND-CP, incentives for waste management projects, such as assistance regarding land and capital; exemption and reduction of environmental protection taxes and fees; provision of freight subsidies to environmentally friendly products and other incentives and assistance for environmental protection activities as prescribed by the law.
Overall, Vietnam’s green investment prospects are positive, as the country’s growing economy, supportive government policies, and increasing focus on sustainability make it an attractive destination for investors in the renewable energy and clean technology sectors.
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